Question 1

In a particular production process, if the quantities of all inputs used double, then the quantity of output doubles as well. This means that

Accepted Answer

A production function has constant-returns-to-scale property if the output increases at the same rate as all inputs are increased. Hence, if the inputs used double and the output also doubles, it implies that the production function has constant-returns-to-scale property. This does not necessarily mean that the production process cannot be enhanced by technological advances or that no mathematical representation of the production function can be formulated. The limits-to-growth property is not relevant in this context.

Question 2

Suppose there are constant returns to scale. Now suppose that over time a country doubles its workers, its natural resources, its physical capital, and its human capital, but its technology is unchanged. Which of the following would double?

Accepted Answer

With constant returns to scale, a doubling of all inputs should result in a doubling of output. However, because technology is unchanged, productivity (output per unit of input) will remain the same. Therefore, output will double, but productivity will not.

Question 3

You bake cookies. One day you double the time you spend, double the number of chocolate chips, flour, eggs, and all your other inputs, and bake twice as many cookies. Your cookie production function has

Accepted Answer

The fact that doubling all inputs results in a doubling of output implies that the production function exhibits constant returns to scale. This means that increasing all inputs by the same proportion will result in an equivalent increase in output.

Question 4

If your firm's production function has constant returns to scale, and if you double all your inputs, then your firm's productivity will

Accepted Answer

The answer of If your firm's production function has constant...

Question 5

In the equation for the production function Y/L represents

Accepted Answer

The answer of In the equation for the production function...

Question 6

Suppose a country imposes new restrictions on how many hours people can work. If these restrictions reduce the total number of hours worked in the economy, but all other factors that determine output are held fixed, then

Accepted Answer

If the total number of hours worked in the economy is reduced, output will also fall since less work is being done. However, if all other factors that determine output (such as the amount of capital equipment and the level of technology) are held fixed, then productivity will increase because the same amount of output is being produced with fewer hours of labor. Thus, productivity rises and output falls.

Question 7

Country A has twice as many workers as Country B. Country A also has twice as much physical capital, twice as much human capital, and access to twice as many natural resources as Country B. Assuming constant-returns to scale, which of the following is higher in Country A?

Accepted Answer

The answer of Country A has twice as many workers...

Question 8

If an economy with constant returns to scale were to double its physical capital stock, its available natural resources, and its human capital, but leave the size of the labor force the same,

Accepted Answer

With constant returns to scale, doubling all inputs (physical capital, natural resources, and human capital) should lead to an increase in output, but not a doubling of it. This is because constant returns to scale means that output increases proportionally with inputs, not exponentially. Since the size of the labor force remains the same, there will be no increase in labor input to boost output beyond the proportional increase from the other inputs, leading to an increase in output and productivity, but less than double.

Question 9

If a production function has constant returns to scale, output can be doubled if

Accepted Answer

If a production function has constant returns to scale, doubling all inputs will double output. Therefore, choice C is correct. Choices A and B involve doubling only some inputs, which may not necessarily result in a doubling of output. Choice D is incorrect because one of the choices is in fact correct.

Question 10

Which of the following statements is correct?

Accepted Answer

Productivity is influenced by many factors, including the skills and knowledge of workers (human capital), but it is not a determinant of human capital per worker. Technological knowledge, on the other hand, has a direct impact on productivity and is considered a determinant of it. Human capital and technological knowledge are not the same thing, as human capital refers to the skills and knowledge that workers possess, while technological knowledge refers specifically to knowledge related to technology and its use in production. Therefore, only statement B is correct.

Question 11

If your firm's production function has constant returns to scale and you increase all your inputs by 60%, then your firm's output will

Accepted Answer

Since the production function has constant returns to scale, increasing inputs by the same proportion (60%) will result in an output increase of the same proportion (also 60%).

Question 12

If your firm's production function has constant returns to scale, then if you double all your inputs, your firm's output will

Accepted Answer

Constant returns to scale means that if inputs are doubled, output will also double. However, productivity (output per unit of input) remains the same because the increase in output is proportional to the increase in inputs. Therefore, option B is correct, as output will double but productivity will not change.

Question 13

If the number of workers in an economy doubled, all other inputs stayed the same, and there were constant returns to scale, productivity would

Accepted Answer

If the number of workers in an economy doubled and all other inputs stayed the same, the productivity would fall, but it would still be greater than one-half of its former value. This is because the constant returns to scale mean that doubling the number of workers would not double the output, but it would increase it by less than double. Therefore, productivity would decrease but still be greater than one-half of its former value.

Question 14

In a particular production process, if the quantities of all inputs used are increased by 60%, then the quantity of output increases by 60% as well. This means that

Accepted Answer

The fact that when all inputs are increased by 60%, the output also increases by 60% suggests that the production function has constant-returns-to-scale, meaning that increasing all inputs by the same proportion results in an equivalent increase in output. This does not necessarily imply that the production process cannot be enhanced by technological advances, nor does it imply that the production function has the limits-to-growth property. A mathematical representation of the production function may be possible, but this information alone is not enough to determine the specific functional form.

Question 15

In the equation for the production function H/L represents

Accepted Answer

The answer of In the equation for the production function...

Question 16

An economy's production function has the constant­returns­to­scale property. If the economy's labor force doubled
And all other inputs stayed the same, then real GDP would

Accepted Answer

The answer of An economy's production function has the constant­returns­to­scale...

Question 17

If there are constant returns to scale, the production function can be written as

Accepted Answer

Constant returns to scale imply that increasing all inputs (including labor, L) by the same proportion k leads to a proportional increase in output Y. Therefore, we can write Y/L = A F(1, K/L, H/L, N/L), which is equivalent to choice C. The other choices do not accurately represent constant returns to scale.

Question 18

Suppose a country reduces restrictions on how many hours people can work. If reducing these restrictions increase the total number of hours worked in the economy, but all other factors that determine output are held fixed, then

Accepted Answer

When restrictions on working hours are reduced, the total number of hours worked in the economy will increase. This leads to an increase in output. However, since workers are working longer hours, their productivity may decrease due to fatigue and reduced efficiency. As a result, productivity falls and output rises.

Question 19

Other things the same, which of the following could explain an increase in productivity?

Accepted Answer

An increase in both human capital (such as education, training, and experience) and physical capital (such as equipment, technology, and machinery) can lead to an increase in productivity. Alternatively, if only one type of capital increases, there may still be some increase in productivity, but it may be less than if both types were increased. Therefore, choice A is the best answer.

Question 20

You sell cupcakes. One day you double the time you spend and double all your inputs, and make twice as many cupcakes. Your cupcake production function has

Accepted Answer

The answer of You sell cupcakes. One day you double...

Quiz 7: Production and Growth

In a particular production process, if the quantities of all inputs used double, then the quantity of output doubles as well. This means that

Suppose there are constant returns to scale. Now suppose that over time a country doubles its workers, its natural resources, its physical capital, and its human capital, but its technology is unchanged. Which of the following would double?

You bake cookies. One day you double the time you spend, double the number of chocolate chips, flour, eggs, and all your other inputs, and bake twice as many cookies. Your cookie production function has

If your firm's production function has constant returns to scale, and if you double all your inputs, then your firm's productivity will

In the equation for the production function Y/L represents

Suppose a country imposes new restrictions on how many hours people can work. If these restrictions reduce the total number of hours worked in the economy, but all other factors that determine output are held fixed, then

Country A has twice as many workers as Country B. Country A also has twice as much physical capital, twice as much human capital, and access to twice as many natural resources as Country B. Assuming constant-returns to scale, which of the following is higher in Country A?

If an economy with constant returns to scale were to double its physical capital stock, its available natural resources, and its human capital, but leave the size of the labor force the same,

If a production function has constant returns to scale, output can be doubled if

Which of the following statements is correct?

If your firm's production function has constant returns to scale and you increase all your inputs by 60%, then your firm's output will

If your firm's production function has constant returns to scale, then if you double all your inputs, your firm's output will

If the number of workers in an economy doubled, all other inputs stayed the same, and there were constant returns to scale, productivity would

In a particular production process, if the quantities of all inputs used are increased by 60%, then the quantity of output increases by 60% as well. This means that

In the equation for the production function H/L represents

An economy's production function has the constantreturnstoscale property. If the economy's labor force doubled And all other inputs stayed the same, then real GDP would

If there are constant returns to scale, the production function can be written as

Suppose a country reduces restrictions on how many hours people can work. If reducing these restrictions increase the total number of hours worked in the economy, but all other factors that determine output are held fixed, then

Other things the same, which of the following could explain an increase in productivity?

You sell cupcakes. One day you double the time you spend and double all your inputs, and make twice as many cupcakes. Your cupcake production function has

Quiz 7: Production and Growth

In a particular production process, if the quantities of all inputs used double, then the quantity of output doubles as well. This means that

Suppose there are constant returns to scale. Now suppose that over time a country doubles its workers, its natural resources, its physical capital, and its human capital, but its technology is unchanged. Which of the following would double?

You bake cookies. One day you double the time you spend, double the number of chocolate chips, flour, eggs, and all your other inputs, and bake twice as many cookies. Your cookie production function has

If your firm's production function has constant returns to scale, and if you double all your inputs, then your firm's productivity will

In the equation for the production function Y/L represents

Suppose a country imposes new restrictions on how many hours people can work. If these restrictions reduce the total number of hours worked in the economy, but all other factors that determine output are held fixed, then

Country A has twice as many workers as Country B. Country A also has twice as much physical capital, twice as much human capital, and access to twice as many natural resources as Country B. Assuming constant-returns to scale, which of the following is higher in Country A?

If an economy with constant returns to scale were to double its physical capital stock, its available natural resources, and its human capital, but leave the size of the labor force the same,

If a production function has constant returns to scale, output can be doubled if

Which of the following statements is correct?

If your firm's production function has constant returns to scale and you increase all your inputs by 60%, then your firm's output will

If your firm's production function has constant returns to scale, then if you double all your inputs, your firm's output will

If the number of workers in an economy doubled, all other inputs stayed the same, and there were constant returns to scale, productivity would

In a particular production process, if the quantities of all inputs used are increased by 60%, then the quantity of output increases by 60% as well. This means that

In the equation for the production function H/L represents

An economy's production function has the constant­returns­to­scale property. If the economy's labor force doubled And all other inputs stayed the same, then real GDP would

If there are constant returns to scale, the production function can be written as

Suppose a country reduces restrictions on how many hours people can work. If reducing these restrictions increase the total number of hours worked in the economy, but all other factors that determine output are held fixed, then

Other things the same, which of the following could explain an increase in productivity?

You sell cupcakes. One day you double the time you spend and double all your inputs, and make twice as many cupcakes. Your cupcake production function has

An economy's production function has the constantreturnstoscale property. If the economy's labor force doubled And all other inputs stayed the same, then real GDP would